WPP plc

Good morning, everyone, and thank you for joining. For those of you that I have not yet met, I'm Cindy Rose, and I'm delighted to have taken on the role of CEO of WPP 60 days ago. I want to speak to you candidly today. I acknowledge that many of our investors have been on a challenging journey with WPP, and today's results underline those challenges. I've read the commentary, followed the share price performance. I fully understand your frustration and the need for action. our recent performance has not been acceptable. I value our shareholders and I thank you for your support and I look forward to engaging with you over the coming weeks and months. Please rest assured that a key priority for me and my team is to strengthen our financial performance and in doing so, deliver improved shareholder returns while continuing to deliver great success for our clients. I'm going to hand over to Joanne to take us through the details of the quarter and in a few minutes, I'll come back and share with you some perspectives on why I'm here and what I've observed over my first 60 days.

Thank you, Cindy, and good morning, everyone. So let me take you through some more detail on our third quarter 2025 performance. Starting on slide five, like-for-like revenue less past due costs fell 5.9% in the quarter, which is weaker than expected and leaves our year-to-date like-for-like performance declining at 4.8%. The timing and phasing of new business losses was as anticipated and represented a drag in the quarter in line with expectations. I will discuss the detail in terms of movement by geography, capability and client sector shortly, but underlying client spend continues to see a high level of polarisation and aggregate volatility with a weighting towards caution. In addition to the organic decline, we continue to see the negative impact of disposals and and the particular FGS Global, which represented a drag on reported sales of 3.2%. This effect will tail off in the fourth quarter when we anniversary the sale of FGS in November. Finally, FX remains a headwind, with the impact in the quarter equivalent to a 1.7% drag on net sales, largely driven by US dollar weakness and mildly offset by strengthening Euro. Overall, revenue-less pass-through costs was down 11.1% in the quarter. Turning to slide 6, a new business, where overall we saw a slightly better performance in the third quarter. Within media, we saw the retention of M&S in the UK, as well as wins with True Green in the US, Suncor in Australia and Maersk and Mastercard globally. We have to acknowledge, however, that the quarter also saw client losses, including bear, and we note that based on convergence data, overall levels of media activity remain subdued relative to historical levels. Looking beyond media, creative new business wins included an expanded global mandate from Helion, PwC globally and the Financial Times in the UK. We continue to see robust momentum within PR, design, brand and identity, with wins from Stellantis, Lipton Tees and Tourism New Zealand. Moving to slide 7 and performance across our businesses, global integrated agencies experienced another challenging quarter, posting a like-for-like decline of 6.2%. Within this, WPP Media saw a like-for-like decline of 5.7% compared to a reported like-for-like decline of 4.7% in the second quarter. This takes a nine-month performance to a like-for-like decline of 3.9%. We expect growth to deteriorate further into the fourth quarter, reflecting the impact from in-year client losses, which start to ramp down from the beginning of this quarter. There are two factors driving our media performance. Firstly, the impact of net new business. At a group level, our expectation for the year remains a net impact of new business to be somewhere between a 100 and 150 basis points drag on our performance. And we've also indicated that the impact of growth client losses will be between 300 and 400 basis points. These losses have been more skewed to media than other parts of the business and are therefore having a disproportionate impact on media's overall performance. Looking beyond the impact of account wins and losses, we have also seen additional volatility in client budgets. To be clear, there remains a fairly significant degree of polarisation. Some markets, some client categories, and even some individual clients in more challenged sectors are seeing very robust growth. But on balance, we have seen pressure on spending amplify the impact from assignment losses. Some of those losses begin to ramp down from this month, which will result in a further step down in media's top-line performance in the fourth quarter. It also seems prudent to mention at this stage that with the profile of net new business performance year to date, the headwinds from growth client losses will sustain into 2026 at a broadly similar level as we have seen in 2025. It is too early to talk about the impact of net new business in 2026. We still very much have the opportunity to mitigate the impact of historic losses with new mandates, And in this context, we are encouraged by an increasing level of recent activity in the new business pipeline, with that pipeline more tilted to opportunity versus risk than it has been in the past 12 months. Alongside this, there remains a significant opportunity to expand scope with existing clients, which we remain very focused on. Looking beyond our media business, like for like for our other global integrated creative agencies fell 6.5% in the third quarter, which compares to a decline of 7.2% in the second quarter. We continue to see signs of stabilisation at AKQA, building on sequential improvement in growth through the first half, and a more robust, albeit still negative, performance at VML, while Hogarth returned to growth in the quarter. Ogilvy continues to see impacts from a more challenging performance in the US, Germany by geography, and CPG and technology by client segment. Again, it is difficult to completely attribute this to the macro given the polarisation of performance across sectors and geographies, but we do believe aggregate market uncertainty is a significant contributing factor. Turning to public relations, like for like declined by 5.9% in the third quarter, following on from a decline of 7.8% in the second quarter. We continue to note a divergence between a more challenging performance in Europe and better new business momentum in North America. Finally, specialist agencies saw like-for-like revenue-less pass-through costs decline 2.2% in the third quarter, following a decline of 1.9% in the second quarter. This reflects particularly strong and continued growth from CNI Media Group, our specialist healthcare media agency, and a return to growth for both Landor and Design Bridge and Partners, offset by weaker performance across our other specialist agencies. Turning to slide 8 and performance by region, North America declined by 6% in the third quarter, following a decline of 4.6% in the second quarter, lapping another tough comp from 2024. The key drivers of this performance were WPP Media and Ogilvy, reflecting the combination of client losses and client spending cuts. Meanwhile, Hogarth, Lambda and Speccoms all saw growth in the quarter. By sector, we have seen continued weakness in CPG, and the third quarter saw a step down in tech and digital services. By contrast, healthcare delivered a stronger performance with high single-digit growth. The United Kingdom declined 8.9% in Q3, compared to a second-quarter decline of 6.5%, reflecting a more challenging quarter-on-quarter camp. Performance was impacted by media client assignment losses, with growth in retail offset by pressure on CPG and automotive. Given the impact of account losses, we expect trends in both the US and the UK to continue into the fourth quarter. Western continental Europe saw an overall like-for-like decline of 4.4%, compared to the second quarter decline of 6.5%. We note particular weakness in Germany during the course of the quarter, impacted by client spending pressures across the government and automotive sectors, in contrast to our more robust performance in southern Europe, in particular in Spain. The rest of the world declined 5% in the third quarter compared to a decline of 6.8% in the second quarter. Within the mix, we note declines in China started to moderate with a third quarter decline of 10.6% versus a decline of 16.6% across the first half. We have also seen a return to solid growth in India, which was up 6.7% in the third quarter versus a flat performance across the first half driven by improved performance from WPP Media. Central and Eastern Europe saw robust performance up 1.3% across the third quarter while the Middle East and Africa were stable. Looking at Q3 performance across our client sectors in slide 9, I want to highlight that this reflects growth across our designated clients which represent 83% of our net sales. CPG continues to be challenging with a decline of 6.7% during the quarter and this follows from a 4.2% decline in the first half. Automotive 2 continued to be weak, down 6.8% in the quarter, driven by client losses and cuts to client budgets. The technology client sector showed slowdown in the third quarter, with a decline of 4.5%, impacted by a client resignation earlier in the year, and with a fairly high degree of polarisation between clients. By contrast, healthcare has returned to good growth. with like-for-like of 6.7% in the quarter, reflecting new client wins as well as growth with existing clients. And moving on to our net debt, slide 10 shows the movement to the end of September, with adjusted net debt at £3.6 billion, stable year-in-year but up from year-end, reflecting our typical cash cycle. Looking towards year-end, as you know, we don't guide on working capital, and as we've always said, the position at the year-end can be volatile. However, a combination of the strong working capital performance in 2024 plus a lower year-in-year volume of fourth quarter billings in our media business with its negative working capital profile will place additional pressure on our working capital at the end of the year and therefore on our spot year-end cash position. In addition, we expect a lower level of incentive expense year-in-year with the cash effect of this felt in 2026 resulting in additional working capital headwind this year. Average adjusted net debt better captures the normal pattern of working capital moves across the year, and this is slightly down through the first nine months of the year at £3.4 billion, benefiting from the impact of the FGS global disposal annualising. Looking at our leverage metrics, while average net debt has continued to come down, the headline EBITDA, implied by our guidance, has also come down relative to exportations. At the first half, our average adjusted net debt to headline EBITDA ratio was around two times and we expect it to be slightly above two times at year end. While bringing our leverage down is a key priority for us, I would note we have an investment grade balance sheet which we are committed to retaining, a strong liquidity position and a broadly distributed debt maturity profile. The weighted average maturity of our £3.8 billion of bond debt is 6.1 years and this has an average coupon of 3.5%. Meanwhile, our total available liquidity across the group stood at £2.9 billion at the end of September, including a $2.5 billion RCF, which matures in February 2030. Neither our bond debt nor our RCF have any covenants, and our credit remains investment grade. And finally, turning to our guidance for the full year on slide 11. Having set our organic growth guidance range at minus 3% to minus 5% in July... Based on performance in the third quarter and our expectations running into the fourth quarter, we are revising our like-for-like guidance to minus 5.5% to minus 6%. Although we do benefit from an easier camp in the fourth quarter, the continued volatility in client spending patterns, coupled with the fact we have a limited cushion from net new business to absorb this heightened volatility, is leading us to approach our guidance for the full year with a high degree of caution. In light of our revenue guidance, we anticipate that our headline operating margin performance, which is guided to decline 50 to 175 basis points, will be at the lower end of this range and around 13%. We still expect adjusted operating cash flow before working capital to be in the range of 1.1 to 1.2 billion pounds. I've already highlighted some working capital considerations and our other modelling assumptions are unchanged. So thank you and I will now hand you back to Cindy.

Thanks so much, Joanne. Let me take a couple of minutes to share with you why I'm here, what I've observed over the last 60 days, and some of the core principles that will underpin my approach going forward. But let me start on an optimistic note. This is a great industry with a multi-year track record of delivering growth, expanding margins, and realizing significant returns for shareholders. I took this job because I believe there's an exciting growth opportunity ahead for WPP. I've known this company for 15 years as a client, as a technology partner, and most recently as a member of our board of directors. I wouldn't be here right now if I didn't believe that we have what it takes to win. We have strong foundations and the ingredients needed to succeed. Amazing clients that represent the largest, most well-known brands in the world. Strong capabilities, world-class talent that spans media, production, and creators. some of the most consequential agency brands in the market, unrivaled global scale and reach, and market-leading technology and technology partnerships that give us a real competitive edge. This is an exciting platform to build on. But our industry is at a critical inflection point. The era of AI is here, and it's moving faster than any technology we've ever seen before. AI is fundamentally reshaping the industry and transforming how we work, how we serve our clients, and how we innovate. AI is reinventing every aspect of the marketing workflow, from market research to brief writing to creative ideation, synthetic testing, content production, audience insights, media planning, campaign activation, measurement, and real-time optimization, all fueled by advanced AI-powered data models. I've spent more than three decades leading through technology disruption and finding the path to growth. And I've seen firsthand how quickly AI can reshape entire industries and the rewards for those who seize first mover advantage. WPP has built differentiated data and AI capabilities that we've been investing in for the past several years. We're in a strong position to lead the market and support our clients as they transform their marketing functions for the era of AI. WPP Open is our agentic marketing platform that enables us to deliver next-generation modern marketing services to our clients, now supercharged by the integration of InfoSum. At the core of this platform is Open Intelligence, our large marketing model, which connects client brand data to data from across our network and from over 350 partners through a privacy-first approach enabled by AI. This approach delivers better business outcomes for our clients with more precision and impact than ever before and frees up humans to spend more time doing what humans do best, building culturally relevant brands that consumers love. I personally believe there's never been a better time to be in marketing. You could even say that AI will usher in the golden age of modern marketing. And WPP is uniquely positioned to deliver on this vision and support our clients as the trusted partner of choice, as they navigate through an increasingly complex world, rapidly evolving technology landscape, shifting consumer behavior and resource constraints. And all of this gives me great confidence that WPP has an exciting growth opportunity ahead. That said, we need to face into our relative recent performance, which, as I said earlier, is unacceptable. In my first 60 days, I've been moving at pace to identify and understand the problems. Fundamentally, I believe WPP has been moving in the right direction, but we just haven't gone far enough or fast enough in adapting to the evolving needs of our clients. I've now met with most of our largest clients and they were generous with their feedback, most of it incredibly positive. But some of our clients indicated that there was more we could do to generate value and to be a better partner to them. Clients are telling us that they want our offer to be simpler, more integrated, powered by media, data, and AI, efficiently priced, and designed to deliver growth business outcomes this feedback provides an excellent blueprint for what we need to do differently going forward in addition it's clear that we need to significantly improve our execution with singular focus on client acquisition and service delivery excellence strengthening our go-to-market dramatically simplifying how we organize ourselves internally and as well as systematically building a high-performance culture. And speaking of high-performance culture, we've already begun to reshape our leadership team, with Devika Bolshandani taking on a critical role as Chief Operating Officer with a focus on growth and ensuring world-class client experience, Laurent Ezekiel moving into the role of Global CEO at Ogilvy, and Michael Froelich rejoining WPP in the role of Global Chief Marketing and Corporate Affairs Officer with many more changes to come. I also believe we have an opportunity to leverage our data and AI advantage to expand our addressable market by pushing harder into enterprise and technology solutions. Technology partnerships are critical to our future success and a clear source of competitive advantage. I will personally be leaning into these relationships to ensure we're maximizing our opportunity. For example, earlier this month, we announced a new expanded agreement with Google, an incredibly strategic and groundbreaking partnership that provides us with preferred access to Google's advanced AI models and tools, resources to co-innovate customized AI solutions for our clients, and enhanced AI skilling for our people. WPP and Google's shared commitment to innovation means that our new solutions are used and validated first within Google's own marketing operations. Partnerships like this one drive return on our AI investments while supporting client success and new business pursuits. Just last week, we launched WPP Open Pro, a new edition of our WPP Open AI platform that empowers brands to plan, create, and publish their marketing campaigns with more control than ever before. This is a strategic move to expand our addressable market and serve the long tail of smaller companies and emerging brands who may not be in the market for the sort of full service offer that we typically provide to large multinational clients. With WPP Open Pro, clients can choose to self-serve for some aspects of the marketing workflow and then complement this with a range of managed services from WPP. We can tailor a customized approach for these brands grow as they grow. In the last 60 days we've already made a number of bold and decisive moves that hopefully give you a sense of how I will approach this role and you can expect more of the same in the months ahead. My team and I are hard at work on our roadmap for the future and we're planning to give you all the detail of our strategic plan as well as our financial framework early in the new year. You can expect this roadmap to reflect the core principles I just articulated. One, simplifying and integrating our client offer and harnessing our data and AI advantage. Two, significantly improving our execution and building a high-performance culture. Three, expanding our addressable market through enterprise and technology solutions. And fourth and finally, strengthening the financial foundations of the group and and improving our performance through operational efficiency and a disciplined approach to capital allocation. Those are my initial observations in 60 days. I do understand that you will have questions, and I ask for your patience as we work through the detail. I look forward to coming back early in the new year to lay out the full strategic plan and financial framework. But to be clear, this will not be a period of inaction. Between now and then, my management team and I will be working at pace to improve our performance with a real sense of urgency while building a detailed plan for future growth and success. So let me close by saying that my ambition for WPP is sky high. We are committed to doing the hard work it will take to turn this business around. We know it will take a bit of time to do so. We also know what it takes to win. We're optimistic, we're energized, and we're confident that we're building the right plan and the right culture to secure a bright future for WPP, our people, our clients, and our investors. Thank you all so much, and we're now happy to take your questions.